reducing debt

Most people that have decided to take control of their finances and reduce their debt have come across at least one of the various debt snowball methods. Basically, creating a debt snowball is a way to arrange one’s debt so as to tackle a single debt at a time (to more efficiently pay off the debts) than trying to pay off all the debts at the same time. It’s an effective way to arrange the debt so that there is the greatest opportunity to succeed in paying it all off.

While the vast majority of people who adopt the debt snowball method pay what they can from their regular salary each month and leave it at that, there is a way to be even more proactive. For those who are truly serious about getting rid of the debt that they have as soon as possible, they can add debt snowflakes to the debt snowball.

The debt snowflake concept is pretty easy to understand. A snowball is simply a lot of individual snowflakes that have been combined together to make a snowball. While each individual snowflake may seem small on its own, when added together they can greatly increase the size of the snowball. The goal is to create as many new snowflakes as possible to float down and add upon your regular monthly debt snowball payment.

Snowfaking debt is creating small alternative earnings earned outside your regular income which then can be added to paying off debt. As the snowflake concept implies, the amount doesn’t matter. Whether it’s a single dollar, five dollars or even a few pennies, every little “snowflake” made can be added to further reduce debt at a faster pace.

The key to snowflaking success is to immediately pay any small amount earned directly to the top priority debt of the snowball (make sure that multiple payments toward the debt are allowed each month — in most cases they should be, but there can be exceptions). One of the reasons snowflaking often fails is that all the small amounts earned never get sent to reduce the debt. Since the amounts are often small, if they aren’t used right away to reduce the debt, they can accidentally be forgotten when the snowball payment is made. By immediately paying any small amount received also helps to show that you’re chipping away at the debt throughout the month in addition to the snowball payment. This can provide an even greater motivation to get rid of the debt as soon as possible.

If you take a survey that pays you two dollars, if you sell something you no longer need for five dollars, or if happen to find a dollar on the ground while walking across the parking lot, it should be immediately sent to reduce the top debt the snowball to increase its effectiveness. By constantly and consistently adding small snowflaking amounts in addition to the monthly debt snowball, the debt will disappear that much faster.

There are a wide variety of ways that you can make small amounts of money to snowflake your debt away. Take the time to brainstorm to figure out any way that you might be able to bring in a few extra dollars (or even a lot) each week in your spare time. Here are a few possible ways to consider. Obviously, not all will necessarily work for you or be something that you may feel appropriate for you, but they should help to get your creative juices flowing so that you can figure out a few money earners that will work for you:

Penny Hoard

There are a lot of people that penny hoard these days. Basically, the copper found in pre-1982 pennies is worth more than the penny itself. Investors want these pennies, but often don’t want to spend the time sorting them from post-1982 pennies. Since the copper is more valuable than the penny, these investors are willing to pay a premium for pre-1982 pennies that still can easily be found in circulation. Collect, sort and sell pre-1982 pennies to investors for profit — currently a $100 worth of pennies is selling for about $175 on eBay (with the buyer paying shipping). And with all those pennies, you will have plenty of activities to keep you entertained if you desire.

Collect Scrap Metals

Scrap aluminum, copper and other metals have value and can easily be sold to any metal recyclers. If you take morning or evening strolls, there is a good opportunity to find discarded scraps depending where your walks take you. If there is a lot of construction going on in your area, there may be quite a few metal scraps for the picking. You can also check with your employer who may also have some scrap metal that will simply be thrown away if they do not recycle themselves.

Sell Coupons

You know all those coupons that you end up throwing into the trash? People actually sell them and if you are good at getting a large number of them, you can make some money selling coupons as a coupon broker. Since coupons can be gathered for free with a bit of time and effort, this is one way to make money without needing a monetary investment.

Do Drug Studies

If you are willing to be a human lab rat, you can make a decent amount of money. There are actually people that do medical testing for their full time income, but even small studies with little risk can add some extra money to put toward your debts.

Teach

If you have a skill or are good at something, offer to teach it in your spare time. It doesn’t have to be limited to academics. It could be a hobby, a passion or simply a unique skill you possess. I have a friend that takes people on hikes teaching them about edible plants in the area. I have another that teaches people to extreme coupon. You could even teach people how to debt snowball and snowflake for a nominal fee.

Find Money

There is a lot of money lying on the ground waiting to be found if you know where to look. I end up finding over $100 in coins on the ground each year and I don’t make any special effort to find them other than on my regular walks (although I do walk a lot more than the average person). If you make a concerted effort to find dropped and lost money, this could be a great way to add to your snowflaking while getting needed exercise as a bonus.

Create Crafts

If you enjoy creating things, take that passion and begin selling what you create on sites like Etsy. I have a friend that has a passion for finding sea glass that he has taken to the next step, and he’s now creating seaglass jewelry out of it. You can also go to local craft fairs to sell what you create. If you have an artistic talent that you enjoy, consider ways that you can leverage that into some extra money in your spare time.

Seasonal Yard Work

There are a lot of opportunities to do seasonal yard work for neighbors to earn a few extra bucks. Depending on the season, you can mow lawns, rake leaves, clean gutters or shovel snow (which seems quite appropriate for this article). If you are already out doing it for your own place, why not take an extra hour and do it for a neighbor as well.

Rent Out A Room

If you have an unused room, consider renting it out to earn some extra money. While there are a number of issues that you need to think carefully about and take into consideration before jumping into this option, current unused space could be a perfect option to help supercharge snowflaking your debt away.

Donate Plasma

Not only can you make some money, you help people that have a variety of diseases (often chronic, rare and serious). Plasma is a key starter material which is used for therapies that treat these conditions. For those that live in large cities, there should be a plasma clinic nearby which will pay anywhere from $25 to $50 for your plasma. Most plasma clinics allow plasma donations twice a week which would mean an extra $50 – $100 a week you could snowflake.

Sell Your Hair

There is always demand for good quality hair by wig and hair extension makers, so you may be able to sell your hair for a few bucks. Most pay somewhere in the area of $5 to $10 per ounce and require a minimum length of ten inches to sell. Hair that is thick may earn more since it weighs more. A typical hair sale will usually net the seller about $40 or so. Especially if you are looking to change your hair style (and reduce the cost of all the hair products you use for your long hair) it’s another way to add a snowflake toward your debt.

Donate Sperm

It’s possible for men to earn as much as $1000 a month selling their sperm to sperm banks, but there is a catch. It’s not nearly as easy as it might seem and few men actually qualify to get paid for sperm donations. Not only do you need to have excellent health, you also need to be young, the correct weight, attractive, and intelligent. And that’s just the first screening process. To ultimately qualify, you need to be able to produce double the amount of sperm the average guy does and it must be “super-sperm” — sperm that is stronger and able to travel faster than normal sperm. But for those that do qualify (and are OK with the moral and ethical issues involved), it’s another option of earning money.

Sell Eggs

No, not become a farmer. Just as men can make money selling their sperm, women may be able to make money selling their eggs for a lot more money — as much as five figures. There is a very good reason for this high price. Not only do women egg donors need to be attractive, athletic, intelligent, and young (generally college age) like the men, they must also agree to a lot more invasive procedures. This can include such things as hormone injections and the eggs being harvested under anesthesia. While this certainly isn’t for most people, those who qualify and are willing would be able to add a snow avalanche to their debt snowball.

Redeem Container Deposits

If you live in a state that charges a deposit for all beverage containers when purchased at the store, collecting these cans and bottles can be a great way to snowflake. It’s simply a matter of figuring out the places where these cans and bottles are often thrown away (think events where a lot of people gather) and collecting the money. For those that don’t want to go out of their way, even picking these up on your daily route can add a few dollars a week.

Collect Game Pieces

Many large companies and restaurants have periodic games where patrons can win cash and prizes. When those games are live, many people are willing to purchase game pieces or codes that you can find for free in the trash. For example, Coke Rewards have codes on caps, and you can find many of these abandoned at large events (combine this with redeeming container deposits and it is a double win). You can keep the caps yourself to earn points for gift cards that you can sell or you can sell the caps to others collecting points online.

Help the Elderly

As the nation grows older, many people need help doing a variety of activities, often simple ones that you are already doing. For example, maybe you take a weekly trip the the farmers market and some elderly people would be interested in having you pick up some fresh fruit and vegetables for them while you are there. Maybe they need a ride to a certain destination or appointment that’s not out of your way. Helping out others doing the things that you already do can add a few dollars toward the snowflake.

Sell Gift Cards

You probably have a few gift cards that you received over the holidays that you aren’t going to be using (or for a store where you don’t have anything you really want). If this is the case, sell the gift cards. There are a number of websites that specialize in buying, selling and trading gift cards and you can always do so on Craigslist or eBay as well.

Trash Trawl

People throw away a lot of things, and often times the things that they throw away have value. If you’re willing to trash trawl or dumpster dive, there is a good chance that you can find some stuff that you will be able to sell for money that you can put toward snowflaking. Remember that doing this doesn’t necessarily mean you have to actually climb into garbage bins. Often people will leave perfectly usable items on their curb for people to take for free.

Bank Account Offers

Keep an eye out for both online and offline bank account offers. The new toaster for opening a bank account in the 1950s has become a cash bonus today. Keep an eye open for these cash offers and take advantage of them when it makes sense.

Advertise on Your Car

While car wraps, where you could get a company to pay you hundreds of dollars a month to have your car wrapped in their advertising, are long gone, a new system of advertising has started to take place. With the inexpensive cost of door magnet advertising, it makes it cost effective for small local business to advertise on cars. If you know someone with a local business, ask them if they would be willing to pay you a small amount to place their advertisements on your car. It could be a win-win deal for the two of you.

Test Drive Cars

Car dealerships will sometimes offer gift cards or other items of value for free to get you into their showroom and have you take a test drive. There will certainly be a strong sales pitch, but if you know you can resist it, then it can be an easy way to earn a few extra dollars (especially if you enjoy driving cars). Just be sure that you don’t end up buying the car as doing so will completely ruin your debt snowflake plan.

Find Unclaimed Property

When bank accounts and other financial instruments go dormant and the owner can’t be located, the assets get turned over to the state. The state tries to locate the rightful owner and part of the process is having the information on the Internet. You can input your name and past addresses to see if you have any unclaimed assets out there that you didn’t know about or may have forgotten about. The first time I searched my name for unclaimed money, I found an old bank account from college with $200 in it I had forgotten about.

Garden Sitter

When people go on vacation for short periods of time, they may not need a full time house sitter, but someone to come by and pick up any mail/newspapers and water plants. This can be an easy way to make a few extra dollars. For those with a bit of flexibility, pet sitting and house sitting can bring in even more money.

Hobby

Anyone that has a hobby that is draining resources should spend some time trying to figure out a way to turn the hobby into a money maker. Hobbyists have the unique advantage of knowing what they would like to make their hobby more enjoyable, and chances are that other hobbyists would also want the same thing. By being able to provide that service or product, you can turn what was once a drain on your finances into something that helps you pay down debt.

Clean Storage Sheds

I had a friend in college who use to spend his weekends cleaning out storage sheds and other areas where junk had piled up. He charged a minimum amount as long as he could keep whatever he wanted from what he found inside, or more if he couldn’t. He found that most of the time he came out far ahead when he could keep stuff to resell, but in either case, he always made a bit of money doing a bit of dirty work that others didn’t want to do. This concept applies to all chores that need to be done around the house.

Garage Sale

Chances are that you have a lot of stuff that is sitting in the back of you closet, in the basement of your house, or in other storage areas that you never use. Snowflaking gives you the perfect opportunity to get rid of all this stuff that you never use to help reduce your debt (or find your emergency fund and recover your sanity). Clear out the storage areas of anything that you haven’t used in the past year and sell it at a garage or yard sale. If you happen to live in an area where garage sales don’t do well, consider renting a spot at your local flea market.

Sell Online

While you are cleaning out your closets for the garage sale, there is a chance that you will come across a thing or two that has more value or is a collectible. In this case, it makes sense to sell the item on eBay or Craigslist where there will be a larger audience that will appreciate it and allow you to get more for it.

Pawn

Another option to the garage sale and online selling is to take some of the things that you no longer need to your local pawn shop. This is a good place to take scrap gold or jewelry as you will get a better price than you will get from most other gold buying places. It’s certainly not where you want to take all of your items, but there may be a select few that will get a better price there than from other venues.

Return Unused Items

If you have purchased things that you have never taken out of the box and still have the receipt, take them back to the store and get a refund. While all store refund policies are different, if it’s something that hasn’t been used, it’s better to try and get your money back than let is sit unused in the box. If the store won’t take it back, add it to your garage sale or online pile of stuff to sell.

Commute Helper

While I don’t expect that anyone reading this will actually do this to make money, I wanted to include it at the end to once again emphasize what a bit of creative thinking can do when brainstorming how you can make a little extra money. When the economy was better, there was a guy that used to get paid (and paid well) to sit in people’s cars so they could use the fast commute lane on their way to and from work.

This is just a list of a few of the many possible ways you can make a few extra dollars here and there in your spare time after work so that you can add a few snowflakes to that snowball that you are already starting to roll.

For anyone trying to get out of debt, the debt snowball method has become the choice of many to tackle their debt. This shouldn’t be a surprise as it is a straightforward and easy to follow method that works. While the basics are the same, there are a variety of different debt snowball approaches that people follow.

The basics of the snowball debt plan are pretty easy to understand. Instead of looking at the long-term goal of trying to pay down all of the debts at once, the person in debt instead concentrate on individual short-term goals of a single debt at a time. They pay as much as they can on this particular debt while paying the minimum amount on the other debts so that they can pay off that particular debt as soon as possible. Once that debt has been paid off, the person “snowballs” all the money they were paying toward that first debt toward the second debt on their list. This continues until all the debts have been paid off.

The controversy comes with what is the best order to pay off these debts. There are a number of ways to go about this and each way has its own benefits and drawbacks depending on each person views personal finances. Just as all people don’t learn the same way, what works best when it comes to personal finances will depend a lot on each person’s particular situation and what will motivate them most because in the end, it’s the motivation to keep going until the debts are gone which is most important. Here are five debt snowball methods that you may want to consider.

Highest Interest

Using the highest interest rate snowball method is the quickest way to pay down all your debt. In this scenario, the person takes all their debts and list them by interest rate from highest to lowest. The debt with the highest interest rate is the first debt tackled, then the debt with the next highest interest rate after that. It would look something like this:

Smallest Balance

Often referred to as the Dave Ramsey debt snowball approach, this method takes into account that for many people money isn’t all about numbers. dealing with money and debt often comes with strong emotions that play a leading role. In this scenario, the debts are arranged from smallest amount to largest amount with the notion that paying off a few debts quickly can provide the motivation one needs to follow through and eliminate all of the debt. In this case, the debts would look like this:

Despise The Most

Sometimes when you have debt, there are some debts that a person just despises more than any other. For example, even though the credit card interest rates are higher, they have a car loan that they just can’t stand. Maybe it enrages them because the car ended up not being what they expected and each month they have to pay the bill, they seethe inside at having to make the payment. In this case, they would place that loan that they hate the most first and then choose either the Highest Interest or Smallest Balance method after that. In this case, the debt order might look something like this choosing Highest Interest after the despised loan:

Most Important

There are also times when a person has a debt that they feel is much more important to pay off than the other debts for whatever reason. For example, maybe they took a loan from a family member and it’s important for them to pay off that loan as quickly as possible. In this case, the loans that were the most important to the individual to pay off would make their way to the top of the list with the person then choosing to use the Highest Interest or Smallest Balance for any remaining debts where there wasn’t a preference. In this situation, the debt order might appear as follows choosing Smallest Balance after the most important:

Secured Debt

There are some people that have so much unsecured debt that they aren’t sure that they are ever going to be able to pay it off. While the above scenarios don’t give that impression, it might be a bit different if an extra zero was added to all the unsecured loans the person had. If the person feels that they might have to file for bankruptcy or at the very least, work with the credit card companies to possibly reduce and consolidate the debt, it doesn’t make sense to be trying to pay that debt off until those matters have been settled. In this case, the person would want to concentrate on and pay off the secured debts or those debts that wouldn’t be forgiven if they ultimately filed bankruptcy. In this scenario, the debt order could look something like this assuming that the personal loan was not received with any collateral:

In the end, there are a lot of individual circumstances that go into determining what is the best type of snowball method for you. The key is to know yourself well enough that you can choose the one that is likely to keep you motivated the longest so that you can see yourself through the entire debt reduction process. While it’s sometimes easy to say go strictly by the numbers when trying to get out of debt, you need to also take into account your emotions with money and make sure that those are also addressed when you create your snowball debt reduction plan.

Finally, if you want to better understand the kind of advice Dave Ramsey is selling, consider buying a copy of The Total Money Makeover. The book is designed as a self study course, so you can work through it at your own speed. The Total Money Makeover has sold something like 5 million copies. There are lots of used copies available on Amazon.com and for under fifteen dollars it is a great investment in your own education.

John and Jane Doe desperately want to be debt-free. They’ve sliced and diced their credit cards and cut their expenses until they’re living on next to nothing but macaroni and mooched meals off relatives. They recycle and reuse. They never go out like in the good old days and a night of fun is a dollar movie rental with cuddling on the couch and microwave popcorn. They only wash clothes, with cold water, on Thursday nights. They’ve turned down the thermostat, turned off the TV and turned around their money spending habits.

Still they can’t make headway in their mission to become debt-free. Until one day, John was listening to the radio and the talk show host brought up the subject of Adult Education. Something clicked in John’s brain and he finally realized that becoming debt-free isn’t just about spending money, it’s also about making money and becoming a better person.

Adult Education can help you on your journey to become debt-free.

First, and the most obvious, is that you can receive training to further your career and enhance your salary or wages. In 2001, according the US Census Bureau, the average person with a high school diploma earned a yearly salary of $26,059. Compare that to the average person with a Bachelor’s degree at $49,674. (career calculator) That’s nearly double the amount of earnings.

But you knew that all ready didn’t you? Right now you are saying, “Going to school takes time and money, how will spending money help me become debt-free?”

Adult Education doesn’t have to be expensive. Notice I have yet to mention the word college. I’m talking about Adult Education here. That encompasses a whole other area. Adult Education can be college, but it can also be trade schools, online courses, vocational schools, night classes at church or local high schools and alternative college programs. Some trade courses are even free if you pledge to work a certain period of time with a certain employer.

Our local community college offers adult education classes that cost $20 to $30 a class. That’s virtually nothing but your time. Night classes are only twice a week. Who can’t give up being a couch potato twice a week? If you work at night, then there are day classes or online classes where you say when you want to study.

Adult Education isn’t about the degree, it’s about learning. In gaining knowledge, you make yourself a more valuable employee. You show that you are self-motivated and have the ambition to move forward. Your boss may suddenly develop a newfound respect for you and give you new responsibilities, maybe even a promotion. You can earn certificates which will equal pay raises.

Maybe you’re like John Doe. He was topped out in his job and going nowhere. He used adult education to make a career change. He had many fields to choose from such as computer technology, medical, business, restaurant work, welding, HVAC, landscaping, and writing.

John chose to work in the computer technology field. He felt that would allow him growth and job placement in the future. He stayed at his old job while he went to classes. Now, just two years later, he has a new job making more than twice the salary. He’s planning on continuing to take Adult Education classes because he wants to eventually open his own business. So he’s taking courses in Business Management.

Jane Doe took some online courses in bookkeeping. They taught her how to better manage their money and understand financial principles. She also took free classes offered at the local high school on computers. When John gets ready to start his business, Jane will be able to help. Adult Education taught her how to be organized and self-disciplined. Jane still has a year to go, but her adult education has all ready helped her get a part-time job as a tax preparer.

John and Jane Doe are real people. They didn’t have much money to spend on adult education. They didn’t go into debt to get their education. John started his first and they saved up the money for Jane to go. They had to put their plans to become debt-free on hold for a short period of time. They kept paying their bills, living frugally and attended school. Their choices actually helped them become debt-free faster. Now they are saving money to start a business of their own.